Apr 28, 2015

Navigating the Multigenerational Workplace

By Kellogg Insight | Based on the insights of Nicholas Pearce

Today’s workforce is more generationally diverse than ever before. With more professionals delaying retirement—either by choice or necessity—companies now have employees from as many as four different generations working side by side. Soon, for the first time in history, a fifth generation will join the mix.

For Nicholas Pearce, a clinical assistant professor of management and organizations at the Kellogg School, this generational diversity can be an asset, not a liability. But it is up to business leaders to make the most of the shift in demographics. “If it’s not leveraged, diversity can lead to chaos and confusion.”

Identify the Pain Points

To make diversity work, Pearce says, leaders need to be more aware of the “pain points” that are likely to cause generational tension. “Many times, the tension is blamed on differences in maturity, when in actuality, generational differences are often the source of the conflict,” he says. Each of the four generations—Traditionalists, Baby Boomers, Generation Xers, and Millennials—has a different idea about workplace standards, from communication protocol, to the preferred style and frequency of feedback, to conceptions of whether respect is earned on the basis of experience or competence. Traditionalists and Baby Boomers, for example, tend to give respect deferentially based on one’s position in the hierarchy, while Generation Xers and Millennials are more likely to give respect to those who are seen as deserving—regardless of where they fit in the organization’s hierarchy. Pearce encourages business leaders to treat these points of difference as they would different cultures—that is, with sensitivity, curiosity, and genuine respect.

One significant cause of intergenerational tension has to do with conflicting attitudes towards loyalty. Older generations tend to be more loyal to institutions—they still believe in what Pearce calls the “implicit social contract,” an understanding that those who pledge their commitment to one company will eventually reap the long-term benefits. Millennials, by contrast, are loyal to individuals. “Many of them saw their parents or grandparents play by those rules and get severed or fired just shy of the retirement party, the gold watch, and the pension that had been promised” he says, which caused a generation-wide shift from institutional loyalty to interpersonal loyalty. “Those workers who are being more intentional and entrepreneurial are now labeled as impatient, but it’s really just an intelligent response to the breakdown of this social contract.”

Showing All Employees They Are Valued

In a global economy where companies hope to recruit and retain the best talent, leaders need to create workplaces where older and younger employees alike feel valued and respected. “There are two components to this,” Pearce says. “One is internal, and one is external.” Internally, the benefits of employee satisfaction are clear: if people feel they are valued, they are more likely to be engaged, so developing a more inclusive environment can lead to stronger growth. Externally, having a team that represents each generation can help a company reach new markets and customer segments while signaling their longevity and sustainability.

“There’s a solid business case for organizations to address these intergenerational dynamics,” Pearce says. “It’s called sustainability—if the organization you’ve worked to build is going to survive beyond you, it’s going to require passing the baton to the next generation. Customers, investors, and potential workers want to know that this organization has a bright future.” And there are a number of steps leaders can take to get this part of their business right.

Three Steps to Sustainability

First, Pearce says, leaders should concentrate on leading people, not managing them. “We manage budgets, processes, plans—in other words, we manage stuff.” Leadership, on the other hand, means developing genuine relationships with people as a way of building trust. “In this knowledge economy where leaders rely on social capital more than formal authority, trust is absolutely essential to effective leadership.”

Second, leaders should create more space for collaboration across generations. This could mean organizing forums to foster dialogue and exchange or creating intergenerational teams to work on a project together. To do this, though, managers need to establish a psychologically safe context that would support that type of interaction. “Creating space for cross-generational collaboration can be incredibly effective,” he says. “Research shows that diverse teams can develop more creative solutions than homogeneous teams.”

Third, leaders should acknowledge difference and be aware of their own biases. “A lot of intergenerational tension is the result of unconscious bias,” Pearce says. “Owning your biases—and gaining greater insight into what activates those biases—is an important step, especially in our politically correct climate where people are ashamed to admit the fact that they don’t always see the world in the unbiased way that they think they should.” It takes humility and self-awareness to appreciate difference and then leverage it in ways that both improve the culture and grow the organization.

“Organizations that get this generational diversity and inclusion piece right stand to reap tremendous benefits—both in terms of making more attractive workplaces and signaling visionary leadership in the marketplace,” Pearce says. “Leaders just need to decide whether they’re really willing to do what it takes to reap these benefits.”